Markets trade flat with negative bias in early deals

Indian equity benchmarks, after coming from long weekend holiday, have made flat-to-positive start on Monday despite weak global cues. Soon, markets turned volatile and are trading flat with negative bias in early deals as investors remained on sidelines ahead of domestic retail and wholesale inflation data for February, along with IIP data for January, to be out later in the week. However, downside remained capped amid foreign fund inflows. Foreign institutional investors (FIIs) net bought shares worth Rs 7,304.11 crore on March 7, provisional data from the NSE showed. Some support also came in as Moody’s Ratings raised India’s GDP growth forecast for FY24 to around 8 per cent from 6.6 per cent on the back of strong domestic consumption and capital expenditure. 

On the global front, most of the Asian markets are trading lower following the broadly negative cues from Wall Street on Friday, as traders reacted to mixed US monthly jobs data and are cautious ahead of the release of key US inflation data on Tuesday that could have a more profound impact on the outlook for interest rates. Besides, Japan's gross domestic product expanded a seasonally adjusted 0.1 percent on quarter in the fourth quarter of 2023. That was shy of forecasts for an increase of 0.3 percent following the 0.7 percent contraction in the previous three months. Indonesia market is closed in observance of the Hindi Saka New Year.

Back home, metal stocks are in focus as credit rating agency ICRA expects domestic steel consumption growth to moderate to 7-8 per cent in the next financial year (FY25), after three back-to-back years of double-digit growth. In stock specific development, Torrent Power jumped after it received a letter of award (LoA) from Maharashtra State Electricity Distribution (MSEDCL) for setting up of a 306 MW grid-connected solar power project at Nasik in Maharashtra.

The BSE Sensex is currently trading at 74023.82, down by 95.57 points or 0.13% after trading in a range of 73956.76 and 74187.35. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.47%, while Small cap index was down by 0.52%.

The top gaining sectoral indices on the BSE were Realty up by 0.84%, Healthcare up by 0.62%, Capital Goods up by 0.51%, Oil & Gas up by 0.26% and Energy up by 0.23%, while Telecom down by 0.52%, Auto down by 0.39%, Bankex down by 0.34%, IT down by 0.31% and Utilities down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 1.37%, Ultratech Cement up by 1.32%, JSW Steel up by 0.69%, Bajaj Finance up by 0.61% and Bharti Airtel up by 0.52%. On the flip side, Tata Steel down by 1.56%, Kotak Mahindra Bank down by 1.08%, Tata Motors down by 0.97%, Power Grid down by 0.92% and HDFC Bank down by 0.87% were the top losers.

Meanwhile, with strong domestic consumption and capital expenditure, Moody’s Ratings in its latest report has raised India’s Gross Domestic Product (GDP) growth forecast for FY24 to around 8 per cent from 6.6 per cent. The estimate comes a day after RBI Governor Shaktikanta Das said the economic growth in the current financial year could be close to 8 per cent in view of the third quarter GDP data released by the government. The latest estimate of Moody’s is about 140 basis points higher than the earlier projection of 6.6 per cent made in November 2023.

In a report, it said ‘We expect India to be the fastest-growing economy among major G20 countries, with its real GDP growth to accelerate to around 8 per cent in the fiscal year ending March 2024 (fiscal 2023-24) from 7 per cent in fiscal 2022-23’. It added government capital expenditure and strong domestic consumption will underpin India’s economic growth. Moreover, India is poised to benefit from increased global trade and investment opportunities arising from companies’ strategies to diversify away from China. On the inflation front, it said ‘We expect India’s inflation rate will decline to 5.5 per cent in 2023-24 from a peak of 6.7 per cent in fiscal 2022-23, and further disinflation will support monetary easing going forward’. 

With regard to the banking sector, the report said non-performing assets (NPAs) will continue to fall as the operating environment improves. The system wide NPA ratio dropped to 3.2 per cent as at September-end 2023 from a peak of 11.2 per cent at the end of March 2018 because of recoveries and write-offs of legacy problem loans. Slippage ratios - or the ratios of newly accredited NPAs to total standard assets during a period - will stay low, helped by India’s strong economic growth. It noted ‘We expect banks’ Common Equity Tier 1 ratios to decline 50-80 basis points because of increase in risk weights for exposures to NBFCs and unsecured retail loans’. 

On the profitability, the report said, it will remain at healthy levels but Net Interest Margin will witness marginal decline as banks reprice maturing deposits at higher rates to fully reflect previous hikes in prevailing interest rates. The banking sector’s profitability has improved substantially in the past five years mainly because of decrease in loan-loss provisions amid improvements in asset quality. Banks’ funding has tightened in the past two years as credit growth has outpaced deposit expansion, with the system wide loan-to-deposit ratio (LDR) rising to 75.1 per cent as of March 31, 2023 from 64.9 per cent two years earlier. LDRs are unlikely to rise further, however, as loan growth slows, banks’ liquidity will remain adequate thanks to existing regulatory requirements.

The CNX Nifty is currently trading at 22483.50, down by 10.05 points or 0.04% after trading in a range of 22458.95 and 22526.60. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.25%, SBI Life Insurance up by 1.49%, Bajaj Finserv up by 1.39%, Ultratech Cement up by 1.36% and Hindalco up by 1.17%. On the flip side, Tata Consumer Products down by 2.55%, Bajaj Auto down by 1.71%, Tata Steel down by 1.49%, Kotak Mahindra Bank down by 1.09% and Tata Motors down by 0.90% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 1079.86 points or 2.72% to 38,609.08, Taiwan Weighted lost 68.84 points or 0.35% to 19,716.48, KOSPI dropped 10.08 points or 0.38% to 2,670.27 and Straits Times fell 6.17 points or 0.2% to 3,140.92. On the other hand, Hang Seng rose 209.59 points or 1.28% to 16,562.98 and Shanghai Composite was up by 6.26 points or 0.21% to 3,052.28.